Charlotte Ashley – Book seller, collector, writer, editor, historian

May 28, 2014

In Which I Invent Numbers

Last night I read Hugh Howey’s take on the whole Amazon vs Hachette thing. I don’t know why. I knew it would make me mad, and it did. Howey is, by all accounts, a super nice guy who is always available for emerging writers to pick his brain. He supports the community and tries his damnedest to make sure creators are not getting screwed. So I had to think that, rather than trying to shill for The Man, he must just be incredibly stupid and ignorant. I was up half the night seething bitterly about how many customers I would face tomorrow who felt entitled to have temper tantrums at the cash register because we/publishers are unfairly getting rich off their backs, and why can’t we all just discount books like that great Saviour of the People, Amazon???

Except Howey isn’t stupid and he knows how publishing works. So what was up with his backward-ass approach to explaining how publishers arrive at their prices?

Then it hit me. Howey is thinking like a self publisher. He thinks Hachette is a self publisher.

When you self publish, the money you spend up front to produce the book is a gamble. It’s the cost of having a dream fulfilled, or of getting your foot in the door. It’s a “long term investment”, betting on the day, five books down the road, when you really start to take off. Nine times out of ten, you never see that money again.

A publisher does not gamble any more than it has to. It looks at its costs – editors, designers, publicists, customer service reps, distributors, warehouses, printers, lawyers, mistakes, everything – and works out exactly how many books they need to sell at what cost in order to make it back. Some years a book hits big, and in those years, somebody makes bank. But most of the time, they pay their employees and produce books.

Howey’s assertion that Hachette “get[s] the full wholesale price of $8.99,” only makes sense if you think Hachette is a guy, like Howey. When a self-publisher sells a book, they use that money to pay back the loan they made to themselves during that book’s production – a cost that Howey seems to be counting after profits, the same way one might buy groceries or pay the hydro bill. Publishers do this the other way around. The wholesale cost of the book pays for the cost to produce the book. You only look at profits after everyone has been paid.

If a self-publisher never makes their money back, they may decline to self-publish again. If they were publishers, this would be called “going out of business”. Hachette isn’t super-keen to do this.

But let’s back up a bit. Let’s talk about Hachette’s “crazy” ebook prices, now that we understand that they are not gambling the same way a self-publisher might.

What does it cost to make a book? What % is the author really getting?

Here’s a simplified break down of the cost to self publish. Back-of-the-napkin stuff.

Book cover – $150 – $200 (this is cheap. CHEAP. You can do it for less, and we will be able to tell.)

Editing services – $400 (this is also cheap, but this is what I will charge you for an 80,000 word novel)

ISBN/expanded distribution – $99 (this is to get an ISBN you can use outside of Amazon)

Copyright registration – $85 (your work is automatically copyrighted, but many people choose to register for ease of legal protection. Many.)

Layout & Design – $150

Kirkus Review (this is a handy stand in for “publicity costs”)- $425

A website – $600

TOTAL – ~ $1900

This was done on the cheap. You could do it even cheaper, true, but you will pay instead with your time, sanity, and quality of product. So, your mileage may vary, but this is a handy number.

The million dollar question is, how many copies will you sell? Truly, nobody knows. Here are some things I do know:

90% of books registered with BookNet Canada only sell one copy. One. Copy.

The best-selling anthology I have ever contributed to has sold 141 copies.

Award-winning YA author Arthur Slade reports selling an average of 635 books per title over a whole year, but this is 4780 copies of one best-seller and an average of 175 books for each other title.

But, that said, I know a lot of first-time self published authors of romance & teen books that come off Wattpad with “fan bases” of 5k+ followers. They expect to sell 500 copies in the first few months, and they do that or better. So if you have an established author presence and a book with a known audience, 500 is a good number to shoot for.

Let’s say you’ll sell 500 copies because I am being very generous.

You price your ebook at $5.99 because that’s what Hugh Howey did. You sold 500 copies. That’s nearly $3000.

Amazon takes 30% ($900)

The IRS takes 30% ($630)

You made $1470. Congrats!

Wait, sorry. I mean you are still short $430.

What about Hachette? How does this break down for them? Let’s look at one subsidiary, Orbit books.

I don’t know how many employees Orbit has, but let’s say you only need the ones that cover the same services the self-publisher paid out for themselves – even though they also need laywers, customer service reps, account managers and so on. Orbit publishes roughly 60 books a year, so we will assume a book gets 1/60th of their services (though in reality, things aren’t this fair – still, short hand). Salaries extrapolated from the bottom end of Indeed.com’s salary estimator.

Cover designer – $48,000/60 = $800

Editor – $47,000/60 = $784

ISBN = $5.75 (you can buy them in blocks for much less than they sell individually)

Copyright registration – $85

Layout & Design/Typography – $58,000/60 = $967

Publicity – $44,000/60 = $734

Printing – $3.90/book x 500 copies = $1950

Author Advance – $5000

Website – $0 (the publisher probably won’t do this for you!)

TOTAL – $10,325

Well, we printed 500 print copies. Let’s say we will sell these in addition to 500 ebooks, because I’m going to pretend I don’t know full well that plenty of big-5 titles only sell 150 copies, period. Let’s say Orbit has high hopes for you, and you will sell 1000 books.

If Orbit sold them for Howey’s $5.99, they’d have $5,990. Amazon would take 30% = $1790. I can’t guess at Orbit’s tax rate, but let’s be generous and say it’s 30% too. $1260. The distributor, by the way, wants 10% on the 500 print books you sold through them. That’s $300. Well, so far Orbit has lost almost $7000 on this book.

If MSRP was $8.99? $8990, and Amazon’s already paid. Well, we’re closer. They’ve only lost $4000. Incidentally, if they don’t pay the author an advance and just give them “25%” as Howey suggests, the author “only” gets $2250, but Orbit has only lost maybe $400. Another few months and they might break even.

Hachette’s barely eking by at $8.99 MSRP, and the author is $2250 ahead instead of $430 behind.

Everybody thinks they will do better. You can make this look better for Amazon & the author by selling more units. In scenario one, you will break even after you’ve sold another roughly 150 books. You’ll make the same as you might have in the Hachette scenario 760 books after that – so in order to make the same money on 1000 traditionally published books at $8.99 MSRP ($14.99 on Amazon), you’ll have to sell 1400 self published ones at $5.99. Maybe you think you will make those sales. I feel that this is… optimistic of you, but that’s your business. It is your dream to gamble on. You might, after all, make it big, like Hugh Howey.

But it would be business insanity for a mainstream publisher to operate as if they are guaranteed 1400, or even 500, sales of every book they publish. They know very well they have to balance the misses with the hits. They have been doing this for decades, after all.

And, of course, there’s the pesky issue of the salaries listed there. It costs more for a publisher to make a book because it employs people – real humans making middle-class salaries. We should not begrudge those people their jobs. Hell, most of them are probably the same creators Howey defends. The $2200 you might make self-publishing a book is not going to pay your bills, not unless you can write a novel every three weeks. Even being a freelance designer or editor isn’t going to pay your bills – not unless you are extraordinarily successful – or you put your prices up. I don’t edit six 80,000-novels per month, let me tell you.

No, it’s publishing that supports the entire creative industry. That’s where book lovers find jobs. Is that worth a buck per book to you? Is it to me.

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64 thoughts on “In Which I Invent Numbers”

I work in publishing and while I like ebooks and am excited by the possibilities of indie publishing and “hybrid authors” I’ve been skeptical of a lot of the math/Utopian visions bandied about by self-publishing’s most ardent evangelists. I think your analysis of the conceptual differences between thinking of Hachette (or any publisher) as being the same as an individual indie author has really hit it on the head.

One other thing to consider about pricing: the book business is possibly the ONLY business in the world where retailers can, at any time and without penalty, ask for their FULL money back from the supplier (ie: the publisher). I doubt many indie authors would offer their customers the same deal.

How is this done? With paperbacks, for example, bookstores tear off the front cover and return those (NOT the whole book) to the publisher for credit. So they destroy the book (leaving us nothing to reship and try to sell somewhere else), and we return their money in full. It’s weird and wasteful, but no one ever claimed that publishing made a lot of sense.

Paperback publishers traditionally knew that for every one copy sold, another copy would not sell and would be destroyed and returned in this fashion for a full refund. So when Orbit prints those 500 copies in your example, that would be what they would expect to SELL. They would also print one copy for every one they estimated they would sell (another 500), plus a certain number to cover copies owed to the author for free by contract, review and promotional copies to be mailed out to generate interest/sales, etc. (perhaps another 5-10% of the print run).

These additional 600-700 copies in our example will generate NO income for either publisher or author but are necessary to produce so that bookstores can have the nice big displays that retailers like, so that Costco can have big skids of the latest bestsellers, so that authors can have copies to give their parents and loved ones, etc. So your MSRP and the income you generate from the books you do know (or reasonably hope) you’ll end up selling must also factor in covering the cost of producing all the other copies that you know will never sell and which will never make you a dime.

One other thing to consider about pricing: the book business is possibly the ONLY business in the world where retailers can, at any time and without penalty, ask for their FULL money back from the supplier (ie: the publisher). I doubt many indie authors would offer their customers the same deal.

I just want to clarify – since I’m a bookseller – that this is not the case. We return the entire overstock book to the publisher. We only tear covers if the book was damaged or defective. With overstock, we are also limited to only 10% of our total purchases with a publisher, and in some cases we are charged a restocking fee when we send the books back. Booksellers don’t have carte blanche to just buy and return books without penalty.

So it’s definitely true that a paper publisher has to account for returns, but they’re not as screwed as all that. Most of the time, the returned books end up at a discounter sold as remaindered titles. They don’t make much money on them, but it’s not nothing either. 🙂

Okay, I’ told this is a practice that only applies to “mass market” paperbacks – those tiny little ones you used to find in airports. We don’t carry many of these. To be honest, they are vanishing from the lists – no doubt in part because of this disposability.

I meant to elaborate on the tax thing, but it would be its own post…. Amazon submits a flat 30% to the IRS if you’re an international bank account. You have to get an international tax ID (which is not free) to prevent this, and then you submit your income to your local tax collector. As with all self-employment income, they count “expenses” and “income” separately, so you’ll still pay tax on the gross, but you will get deductions for expenses.

As with all things taxy, it’s convoluted, but if you’re collecting freelance income, you want to put 30% of it aside for taxes, even if you can reduce it later.

1. ISBN – not needed – saves $99
2. Copyright registration – not needed – saves $85
3. Layout and Design – easy to do by yourself – save $150
4. Kirkus Review – you’re kidding right? – save $425
5. Website – Who spends $600 on a website for a single book ? To create an author website will maybe cost a few hundred dollars, but will be spread out over every book you ever write, so lets just squash this one as a per book cost – save $600.

Onto your traditional publishing numbers:
1. ISBN – actually in blocks of 1000 you can get them for $1.00 a piece, and Bowker probably gives even bigger discounts than this to the big publishers.
2. Printing – I thought we were talking about ebook prices? – saves $1950
3. Publicity – Right, like the publisher is going to do this, especially for a book that they don’t think will sell 500 units.

The biggest problem with this article is that you think a publisher would actually publish a book it only thought it was going to sell 1000 copies of. In what world is a publisher going to give an author a $5000 advance on a book that it projects will only sell 1000 copies? Do some books under-perform projections – of course. Do most books leave publishers in the red – no way – or as you say they would go out of business real fast.

To summarize your comparison is based on a self-published book with highly inflated costs (inflated by $1359) to a make-believe scenario where the publishing company will offer a contract on a book it only expects to sell 1000 copies of (and you inflates this cost by $2689).

Making the adjustments, and still using your numbers (and ignoring the inaccuracies of the tax issue), a self-publisher would still make $929. On the flip side, if a traditional publisher didn’t think a book could sell at least a 1000 copies, they would never give the author a contract, so they make $0.

Oh, you can absolutely self-publish on the cheap! As I say, you pay for that in your own time, sanity – and ultimately with the quality of the book. I know plenty of people photoshop their own covers, hire friends to proofread, lay things out themselves, do their own websites and more – but you can spot those people form a mile away and most often, the final product screams “amateur”.

Which is fine too. Some readers don’t mind. But I have never seen a self-pub break out (sell more than a few hundred copies) that was not indistinguishable from a traditionally published book.

As for the traditionally published numbers, I don’t think they are that far off. I did a break down for the no-advance option, but in fact, most traditional publisher offer that advance anyway. Yes, they lose money. Traditional publishers have always played a role in nurturing early-to-mid career authors, putting more money into them than they get out. This is changing as margins get thinner, but it hasn’t vanished yet. It WILL vanish if Amazon tries to force them to cut their prices. I’d prefer if it didn’t.

Similarly, the publicist. You get a publicity budget with a traditional publisher. You get the services of a publicist. You get their contacts, their name, their legitimacy. Even if they aren’t taking our ads in glossy mags for you, just having their name on your book will get your read by reviewers that won’t even look at a self-pub. That publicist gets paid. They are a cost to the publisher – and again, something I want to see publishers continue to do.

You can’t just wish away costs by saying you’ll do them yourself; that’s still time you could’ve either worked at your “proper” job or spent writing. That’s still a cost, even if you don’t notice it in your bank account.

Your website costs are too high. If your Domain registration plus hosting is more than $100 per year, your paying to much. Use WordPress, and even with a custom theme you’re still at less than $300. That’s $1000 the other direction.

You don’t need ISBN, copyright, or Kirkus. Kirkus especially in the day of Twitter, Facebook, Google+, etc…

And the author in your scenario isn’t 2550 ahead. There’s the agents cut, and in these days of joint accounting and payment schedule, how long before any of that shows up in your account. Let’s say you wrote that book as part as part of a 3 book deal, with a $15,000 advance, 5,000 per book, joint accounting. Whats the math look like now?

I paid $600 for my website, and I got a discount. That’s not counting web hosting. 😉 But yes, you can do it cheaper. You can do EVERYTHING cheaper. But I don’t think Howey was advocating publishing for as little money as possible. If anything, that’s exactly the problem I see in this Amazon vs Hachette thing – nobody will make any money if Amazon wins. Freelancers, web designers, graphic designers, publicists – you’re talking about putting them all out of a job. Why would potential and current authors, readers, and society as a whole want this?

If you’re worried about angry customers, just tell them that they’re paying for publishers to stay in business. Explain that those exorbitant Manhattan rent prices and thousand dollar lunches are necessary for the cultivation of CULTURE.

(Still looking – so far, it all looks fine. Varying degrees of fine, but fine. Let me dig through my Inbox for some of the stuff I’ve recently had solicited at me and I’ll show you what most of what I see looks like…)

I will echo the fact that your numbers are only one scenario and not all that accurate. It can be done for less and still look as professional as a mainstream publisher. The Kirkus Review is certainly not necessary and including website costs is a canard. Do publishers pay for a writers’ website? I’d guess that’s pretty rare.
More importantly, your post assumes that the Indie publisher has only one book. Indie publishing is for serious writers who want control, independence, and who will work hard to publish relatively frequently. The chances for any success with only one or two or even three books is miniscule. Which is also true of mainstream publishing.

For sure, there are a lot of different way to do it! But my core premise here is that the publisher is not doing the wrong thing by refusing to drop their prices. Their prices reflect their costs. If they changed their model to be more like the one you are suggesting, people would lose work and the quality of the product would suffer. There isn’t a cheaper way for them to pay fair wages – as you point out, the only cheaper option is to not use services.

But my core premise here is that the publisher is not doing the wrong thing by refusing to drop their prices.

That premise is, indeed, true. But Amazon isn’t doing the wrong thing by refusing to pay those prices. Amazon, as a retailer, can choose to buy and sell pretty much whatever it likes pretty much however it likes (barring illegal stuff like states who bar alcohol shipping, etc.). It costs money to store books, too, so Amazon isn’t doing the wrong thing by not ordering books it doesn’t know it needs straightaway and avoiding that cost. And would you want to accept pre-orders for books you weren’t sure you were going to have the right to sell in the near future? Amazon might well lose the right to sell Rowling/Galbraith’s next novel if these negotiations fall through.

It’s not Amazon’s–or reader’s–faults if publishers’ costs are high.

Also, no offense, but I think you’re overpaying for your site. It’s nice and minimal, don’t take me wrong, but I don’t really see any functionality that would justify $600. Is this a WordPress build? It looks WordPress-esque. (Which I mean as a compliment. WordPress is pretty great in a lot of ways. I use WordPress.)

Yes, it’s a WordPress back end. 😀 I feel I got my money’s worth, though. The time and effort involved for me to learn not only the technical execution, but some design skills would have been exhaustive! I found a designer I liked, who has done other author webpages I enjoy, and I paid him a fair price for his services. Absolutely no regrets!

I don’t feel that a publisher’s costs are unreasonable, though. As I say, even if we discount a lot of what I didn’t enumerate, just the labour of the people involved alone is worth it. I want those people to make middle-class wages. I want those people to have jobs. I’m not sure how publishers like Hachette could reduce costs significantly without cutting into that labour.

True, Amazon doesn’t have to pay anything they don’t want to. Fair enough! I didn’t say anything about the spat until Howey spoke up, to be honest, because if Amazon just chose not to buy from Hachette, that would be their right and I get that. What I object to is anyone’s assertion that publishers should reduce their costs, or that their prices do not reflect the costs. I don’t want a WalMart-style race to the bottom in the publishing industry. The economy’s in the crapper enough without sending yet another industry offshore.

I’m going to leave your proposed pricing – as well as your complete dismissal of authors who manage to put out a good product for far less – alone, because other people have/will address that.

But, you said:

” … nobody will make any money if Amazon wins. Freelancers, web designers, graphic designers, publicists – you’re talking about putting them all out of a job. Why would potential and current authors, readers, and society as a whole want this?”

I also want to know where all those freelancers earning middle class incomes are — not working for Hachette, I can pretty much guarantee. In fact, self-publishers have actually created many, many, many jobs for formatters, cover artists, editors, including editors recently laid off by the big publishers.

Yeah, he lives in a very nice place. He’s managed to make a lot of money by offering goods at LOW prices. That kind of kills your argument.

No, there’s a lot of money in offering stuff for cheap! I won’t argue otherwise. My argument was that publisher’s costs and prices are fair. Bezos’s fortune is neither here for there. That was in response to the person who seemed to feel New York publishers don’t deserve their money either. 🙂

Your costs for self-publishing are a bit inflated. For one thing, there’s no need for an ISBN number for ebooks, and for print, the printer (CreateSpace, for example) will provide one for free or a nominal cost ($10).

As for traditional publisher costs—yes, they’re high. They have Manhattan offices and large staffs, so, of course, their overhead is considerable. They manage to maintain that overhead by paying authors—the people who create the content they sell—the smallest piece of the pie. What is generally a fixed cost for self-published authors, costs the traditionally published author a continuous majority percentage of sales over the life of the publication (which these days means pretty much forever).

If a self-published author doesn’t make sales, he or she either continues trying, continues investing in their business (as any business person would do) or gives up.

If a publisher doesn’t make money on a book, he drops the writer and pretty much ruins his or career. Nobody in the industry wants to pick up a writer whose last book didn’t sell—not the publishers and not the retailers. So while the publisher is risking some lost revenue, the author, when he/she signs with a traditional publisher, is risking their entire livelihood.

The indie author movement has generated a whole new “creative community” in which book designers and cover artists and freelance editors and marketing consultants and even smaller publishers are thriving. Indie authors who publish print books through Createspace, etc., are providing work as well. These are real jobs by real people.

There is nothing special about Hachette or any of the big publishers other than they’re very large corporations with a lot of power in the industry. They don’t produce better books (Snookie, anyone? Shades of Grey?). They don’t have better insight into what books will sell and what won’t. And a few decades ago, they were very quick to embrace the massive book chains that put the smaller bookstores out of business, causing many people to lose their jobs.

Everyone seems to forget their history. Things change. People get hurt. People lose work and have to reinvent themselves. It happens every day. And when traditional publishing gets into its head that they can’t head into the future doing business as usual, they’ll be better off for it.

Perhaps instead of getting angry at Hugh Howey or anyone else, we should encourage the two parties in dispute to negotiate quietly and stay our of pointless PR wars.

I think we can put aside jabs about who is richer: Amazon or Publishers, because I think we can all agree that publishing, no matter how you do it, is a huge industry and some people are going to get rich. And why shouldn’t they? This isn’t about which corporate overlord gets all the dollars. Neither option is exactly a socialist utopia.

You also definitely have a point re: what authors can do if their book doesn’t sell. But I will point out that a publisher dropped by their publisher can always self publish or go back to their day job, and they’ve lost less than someone who has invested potentially thousands of their own dollars (I know people here are taking issue with how “inflated” my self-pub costs are, but to be honest, I know A LOT of indy authors who paid far more than what I listed here. So while, yes, you can do it cheaply, it can also get pricy. And it does get pricy for a lot of people.). On the other hand, if Amazon strongarms the entire publishing industry into operating the same way – invest a lot up front, no permanent employees, low margins – far more people will lose their jobs, and they won’t have the same recourse. I don’t think on a macro-economic scale, losing the traditional publishing industry will be a very good thing. Because:

The indie author movement has generated a whole new “creative community” in which book designers and cover artists and freelance editors and marketing consultants and even smaller publishers are thriving. Indie authors who publish print books through Createspace, etc., are providing work as well. These are real jobs by real people.

I feel like there’s a lot to unpack here. Because, yes, I am a freelancer too, and make a not-insignificant chunk of my income from editing, critiquing & reviewing. But not enough to make a living. Not enough to pay my rent or feed my kids. I love the community, but there isn’t enough money in it. See every comment above – everybody is falling over themselves to pay as little as possible. That’s great for the creator, but terrible for the community. Freelancing is not a real job. It doesn’t pay enough. It isn’t stable. There are no benefits. No safety net. A few will make a real living at it, but not enough. We want industries that employ a lot of people, not a few.

Frankly, Amazon deserves to be richer. Amazon does a good job– flexible, innovative, customer-centric. Publishers have done a pretty lousy job over the last few decades, and yes, I have worked in publishing as well as writing. Most important, publishers regard their retailers as enemies and their authors as pack animals (they even call us “the stable”). I hate to hear what they call customers.

I couldn’t care less whether Amazon or Hachette makes more money out of this deal, my concern is really only for authors.

You speak of a safety net. Let’s talk about that for a moment. Most authors work their asses off to write a book, often in obscurity, and once they sell one to a traditional publisher, they get a small advance (say $5-10K), spread out over a number of years (usually three) and, if they’re lucky enough to earn out that advance, a small royalty on subsequent sales. And because they’re locked into an exclusivity contract with the publisher, they can’t write another book unless it’s in a non-competing genre.

As a result, most traditionally published authors cannot make a living. Although THEY are the ones providing jobs to everyone in the publishing industry. Their work is the reason the industry exists. Yet most of them can’t make a living. And if they don’t perform to expectations, they are discarded unceremoniously. That “community” continues to thrive, while they simply have to move along.

In other words, safety nets are completely non-existent in an author’s world.

An author who self-publishes has a difficult road as well, but as Hugh Howey’s numbers show, many more of them are quitting their day jobs and making an actual living at their chosen profession.

Instead of fighting tooth and nail for an old “community”—which also employs freelancers, by the way—why don’t booksellers and other professionals EMBRACE indie authors? If they do, soon or later this new community will be just as vibrant as the old once once was.

As a result, most traditionally published authors cannot make a living. Although THEY are the ones providing jobs to everyone in the publishing industry.

So it shall ever be, right? I mean, most authors have never been able to make a living – traditionally or self-published. I don’t think we can point to a case where the difference between quitting the day job or not was the publisher’s margins. As I pointed out in my original post, the “margin” an author gets, up until the moment they’ve sold more than a certain number of books, is super-duper low either way. Once you’ve crossed the threshold into profitability – say, over 1500 copies – a trad. author gets 10% of $8.99 ($0.89), where a self-pub gets 70% of 5.99 ($4.19). To quit the day job, you need to sell more than 8500 books in a year either way. It’ll take the trad. pub author longer, but with sales like that, they’ll get another book deal with an advance. So I don’t think it’s the publisher holding them back.

Instead of fighting tooth and nail for an old “community”—which also employs freelancers, by the way—why don’t booksellers and other professionals EMBRACE indie authors? If they do, soon or later this new community will be just as vibrant as the old once once was.

I would love to embrace indie authors! What would you suggest? Reviewing their books? Done. Carrying them in my store? Done. Publishing them myself? Done. I can’t force customers to buy them, I’m afraid. I get on the order of a dozen self-pub or indy-pub’ed solicitations per day, and in that time I’ve seen two that I would consider buying, reading or reviewing. I don’t care where the book comes from, but it has to look good. It has to be professionally produced. As you can see from the comments above, most people INSIST they can produce most of a book themselves – so most people’s books won’t ever show up on my shelves. Those few self-pubs who take themselves seriously enough to pay professionals to do professional work? Absolutely, my arms are wide open.

I’m glad to hear your arms are open. Maybe you could encourage others to open their arms as well. Most instead ignore indies or complain about how evil Amazon is.

Because the prospects for actually making a living at their craft are leaning more and more toward indie, more and more traditional authors are making the leap and more and more newcomers are giving it a shot as well. It will take TIME for this new version of the industry to grow and prosper, and as the authors make more money, more creative services will be sought. I know of several cover designers who already have more work than they can handle.

The old, bloated system my provide jobs for now, but that will change over the next decade or so. And it isn’t Amazon’s fault. It’s just the way of the world. Technology always changes things and those who embrace those changes usually wind up winners.

The old, bloated system my provide jobs for now, but that will change over the next decade or so. And it isn’t Amazon’s fault. It’s just the way of the world. Technology always changes things and those who embrace those changes usually wind up winners.

I would just be wary of praising out Great and Benevolent Overlords. If they ever decide to strongarm self-pubs, there will be very little we’ll be able to do. We’re not big enough or organized enough. Not to mention – where else would we go? They could change their terms tomorrow and the best we could hope for is a collective shrug. Amazon has not had a great record for looking out for the interests of their suppliers.

I published in traditional publishing for several years, and while I value the friendships I made and many of the people I worked with, I always felt like the red-headed step child who was told to stay in the closet and only come out when I was called on. I think this is the same for many authors.

When I asked about sales, made suggestions for cover art, suggested marketing strategy, etc., I was largely ignored. There were exceptions, but for the most part, my job was to “let the professionals do it.”

Working as an indie author with my “overlord” Amazon has been nothing but a joy. Amazon doesn’t make any creative demands of me and does a damn good job of promoting my work. It also works behind the scenes to make sure we indies don’t feel neglected. The experience is a thousand times better than my experience with traditional, plus I’m making more money (and I was already working full time in traditional).

Will Amazon start to strongarm self-pubs? I suppose there’s that chance. But there is no indication that this will happen at all. Not through my interactions with Amazon.

Traditional publishers will continue to strongarm authors, however. Just try to negotiate better ebook royalties or a contract that frees you of exclusivity and you’ll find out soon enough.

@Charlotte – I’m sure all the publishing CEOs live in tiny shacks, right? (Actually, Jeff Bezo’s house is more modest than I’d have expected. Beautiful, but more modest.)

I do believe that is only one of his many homes! I thought it was tasteful. >.>

Anyway, per later comments, my intention there was not to quibble with anyone’s fortunes. The original commenter seemed to feel the publishers were making unfair millions – I only point out that Bezos has his own as well.

So it shall ever be, right? I mean, most authors have never been able to make a living – traditionally or self-published.

And this is just fine in your world, isn’t it? Right up until you found yourself in the same boat.

I as the reader who pays the money to buy the books would prefer a model where everyone who has input into the book gets paid some rational sum. My definition of rational pays the author first and most.

And this is just fine in your world, isn’t it? Right up until you found yourself in the same boat.

Well, I am in this boat, but I have no illusions about it. Even Wordsworth had a day job, right? Writing fiction isn’t a sure-fire way to make a living, self-pub or otherwise. This isn’t because of publishers – it’s because of other writers. There are almost 300,000 new books published every year in the US alone – and they’s not counting “e-only” publications. I do my best, but I can’t read more than about 30 books a year, and most of those aren’t new. Most people will only sell a handful of books. That’s just how it is.

I as the reader who pays the money to buy the books would prefer a model where everyone who has input into the book gets paid some rational sum. My definition of rational pays the author first and most.

But even the self-published author pays her designer, editor and publicity first. They are also the only ones GUARANTEED to be paid. The author only makes money once they repay themselves that loan. Once the investment has been paid back, the author makes money – even in the traditional publishing model.

Let’s assume your publisher costs are correct. And let’s further assume publishers are working at 100% labor efficiency, so they can’t cut labor. Let’s also assume they are locked into 100 year leases in Manhattan, can’t move to cheaper digs, and get free lunch anywhere the waiter is not named Grant.

I agree Howey is thinking like an independent who makes fixed cost investment for a book.

In that case publishers are doomed. Price competition from independents will drive them out of the market. It’s not a contest between groups of people. It’s a contest between technologies and systems.

It doesn’t matter if prices are fair. Who cares? Books are offered at a price, and consumers decide. They hit the offer price, or go on to another book.

An independent book has to carry the author and the retailer. The published book has to carry the author, publisher, and retailer. When economic inefficiencies become known, and alternatives are available, the alternatives triumph. It’s just like widgets. Books aren’t special.

It doesn’t matter if prices are fair. Who cares? Books are offered at a price, and consumers decide. They hit the offer price, or go on to another book.

Well, I care. You and I are probably of very different minds about what the economy should look like, but my biggest priority is that businesses can viably pay the most number of people the most reasonable salaries. I don’t think leaving it to consumers is the best-ever idea, because they will always say, “less”. It $8.99 too much? Yes. $5.99? Yes. $2.99? $0.99? They will always, given the choice, pay less. Of course there are always ways of driving that price down. Pay fewer people, Get offshore labour. Don’t pay anyone at all.

It’s up to us to draw the line. Books aren’t special at all – but I’d like to pay fair prices for widgets too.

I should note – we could replace “Hachette” with “Thomas Allan and Sons” and the numbers would be the same – and they are not a fancy New York firm. They have offices in modest Markham, Ontario. They are a privately owned company not run by millionaires. They employ a middling number of people at good wages and make nice books. It will still cost them an amount of money to produce a book which will result in a $14.99 ebook.

Once the investment has been paid back, the author makes money – even in the traditional publishing model.

No, sorry, doesn’t work that way for the trads, and I’m surprised you would claim so. By the time the author has earned out the advance, the publisher has recouped costs several times over. They are, after all, keeping several times as much money per book as they pay to the author, and your own numbers put the book expenses roughly equal to the advance. Even claiming the advance as an expense to the publisher, they still break even way earlier than the author could expect to see additional monies.

I’m just a lowly reader and book blogger who hangs with some self pubbers, but I can run a calculator.

I have also noticed some dreadful covers in my genre (some put out by a Hatchette subsidiary and others by a Harlequin subsidiary) that don’t come close to the covers used by self-pubbers whom I know do the work themselves. Not much value added there, I’m afraid.

No, sorry, doesn’t work that way for the trads, and I’m surprised you would claim so. By the time the author has earned out the advance, the publisher has recouped costs several times over.

Sorry, I guess I was unclear. I just meant that the publisher has costs. They don’t start making a profit the first time they sell a book. They, like the self-publisher, have invested a certain amount of time, money and labour in the book, and first they recoup that investment. THEN they pay out to the author (depending on their contract – when the royalties kick in is always a question). I’m not trying to claim the author gets all the money after that – sorry if that wasn’t clear.

I definitely wouldn’t claim traditional publishers have the monopoly on good covers – but I still wouldn’t recommend any self-pubber do it themselves unless they are graphic designers. Either way, they should have professionals.

I’m not, by the way, trying to make a case for traditional over self publishing by any means. I’m trying to show that the traditional model has valuable costs which I think they are right to try to maintain.

There’s no reason cover design and editing should be anything other than fixed costs. That’s a publishing house scam.

What happened is that publishers were able to create a system that excludes. And once that was done, everyone wanted in. And once they got in, they were grateful for the small percentage of sales their publisher gave them for the work they did and were happy to pay it for many years. It became an accepted thing to say, “Well, writers don’t make much money anyway, be happy with what you’ve got.”

Technology is changing that. The exclusivity is gone. And more and more authors are taking advantage of this.

Self-publishing is an investment. And I think too many people lose sight of the fact that writing is a business and should be treated like any other business. Some will lose their investment and others will quadruple it or more. Just like opening a burger stand or design studio.

But at least they have the technology that allows them to reach thousands of readers and they no longer have to ask for permission to publish. Unless publishers do something to make what they’re offering attractive, they will continue to bleed writers.

You and I are probably of very different minds about what the economy should look like, but my biggest priority is that businesses can viably pay the most number of people the most reasonable salaries.

My biggest priority is business increases the welfare of the greatest number of people at the lowest possible cost. That means consumers plus the most effective and efficient number of workers needed to produce the product.

Of course people will try to get things cheaper and cheaper. Fine with me. That makes zillions of consumers better off. That’s how the whole economy works, and it has brought more prosperity to more people than any system in history.

Should consumers pay more for everything in order to keep the most people employed in inefficient production? Why? It has been tried over and over and has failed. It doesn’t work.

eBooks are a textbook case. New technologies and systems allow production at much lower costs. Independent entrepreneurs rushed to profit from the new technology. And those lower costs have been passed onto consumers, increasing consumer welfare.

The part I think is the scam is the argument that there are somehow extra costs for editing, proofing, and covers. Editing and proofing are done whether the book goes into print only or print + ebook (however well or badly done, it’s still only once) and the cover is *possibly* a simplified version of the print front cover, so minimal extra cost, and ebook formatting is something I’ve watched get done in a lazy afternoon, so that shouldn’t be a huge cost for most books. But somehow this all gets conflated into why the costs for ebooks are as high or higher than for the print, and therefore why trad ebooks are so very very expensive. Although I haven’t seen that argument made as much recently. But still, the only cost an ebook should have that a print book doesn’t is formatting, and that’s not, or shouldn’t be, as expensive as designing the print version. Maybe a couple hundred bucks at the most. All the rest is done already. Fixed.

Anytime you ask publishing houses what they do for authors for their large chunk of the pie, they usually site nurturing, marketing, as well as cover design, editing, etc. The claim is that these things cost money and the publisher needs to be compensated for them.

Well, yes. Technically. But for the life of the publication?

Once the costs are paid for, they’re done, and the author would be better off simply paying for these fixed costs him/herself, rather than be beholden to the publisher for what could be years.

The nurturing days are pretty much over, by the way. The marketing, unless you get a mega advance, is left up to the author. So the value of having a publisher in the mix has lessened considerably in the past few years.

Well, I wish this was two years ago when I had a book in the top one hundred of all paid e-books for a moment. Then I could blow my own horn louder. That book cost me ten dollars to produce. I am in the cellar now, but paying more wouldn’t have kept me out of the cellar. Me doing more promoting would have. This I know to be true.

uh yes it is. Whether you get an EIN (as I did because I started and registered a publishing company with corporations canada) or an ITIN as an individual. It is completely free. I got it free and so did many others.

Here is a useful post filled with people (many are Canadians!) who also got the tax id for free.

Why would the IRS take 30%? Do you mean as income taxes that we pay on all income, including royalties from Hachette? (And you actually have to be earning pretty well to pay 30%, and that’s only marginal– only on income over $89K. (Up to that point, the tax rate is lower.)

We have to pay income taxes on any earned income. So? Not sure how that applies to this in particular. I get royalties from both my self-publishing and my trad pubbed books. It all goes into the same Schedule C pot on my tax return, and I pay the same amount.

I can’t really judge the rest of your numbers (there’s a reason I became a writer!), but acting like only self-publishers dealing with Amazon have to pay income tax makes me wonder at the rest of the numbers.

But I agree– self-publishing, the expense is almost all on the writer. In traditional publishing, the writer still has to do most of the work (and there’s expense involved in that too), but the publisher does pay for a lot of the expenses. As it should– it gets the profits, after all. It’s not like that’s shared with the writer. (Royalties are NOT profits.)

Okay, sorry to keep on when everyone else has moved on, but maybe it would help to get an author’s POV. (Maybe not.) In the last decade, things got really bad for many authors. First among the “bad times” authors were the ones who were good writers but just couldn’t get that first contract because there were so few “slots” open. It was harder and harder to get through that “Gate” of the gatekeepers, and many good writers just gave up. The days when an obscure English teacher from Maine could get read by a major agent and/or editor and be allowed to grow into a major force were over. Editors and agents– no doubt partly to avoid the angst– got progressively more distant and began acting, yeah, like feudal lords. They could make us and they could break us.

Authors who did get that first contract often never got another, or got 50 more and then suddenly got unceremoniously dumped by their publisher, to whom they’d been loyal and when their print runs were high (which meant usually their sales were high, not the other way around necessarily), they didn’t go seeking another publisher. Of course, once you’ve been dumped like that, when you’re no longer bargaining from a position of success, it’s hard to find another publisher.

And because the major publishers were getting bought and sold and merging and laying off most of their editors, not to mention giving huge advances to celebrities and “some guy who ran for and lost the Republican primary” (Rick Santorum, I mean you), they weren’t investing a lot in innovation and were showing a terror of technology that was sort of startling. I think if not for being more afraid of the anthrax scare than email, they’d still be expecting us to spend $30 printing out and shipping paper manuscripts. Not to mention they see ebook developments as a bad thing.

So the costs didn’t go down the way they have for many industries. Prices went up instead, and pretty soon, they weren’t often hitting that spot where women especially — constant readers some of them– could feel comfortable making an “impulse buy” of a book or two. That was dumb. The move towards trade pb and away from mm pb was part of this– You know, I’m a reader, and if I see a book by an author I don’t know at $5.99, I might buy it. Same book at $15.99, not likely.

Anyway, a lot of us authors just got pushed out. Couldn’t sell, couldn’t get a contract, kept trying, kept being told that we weren’t following the right trend or our quality wasn’t up to, I don’t know, Snooki’s. Five years ago, we’d meet up at conferences and get drunk and talk truthfully, not sugar-coating, and we’d find out that even the ones we thought were really successful were in trouble– their editor wouldn’t buy any of their ideas, the marketing dept wouldn’t push their books. I’m not the only previously successful author who quit writing. It wasn’t just no fun anymore. It felt self-destructive.

Then came the ebook reader– and yeah, Amazon led the way. You know what? We’re writing again. And the books that were turned down by our old trad publishers, the ones that were accepted but only on sale for three weeks or so, were selling– to readers. Direct to readers. Readers never stopped wanting books like we write– those books, partly because of all those costs you mention, just weren’t going to make enough money for the publisher. But we could manage to put out the same basic product (our book) for considerably less, and make much more money while pricing the book lower.

And readers came back, and they’re happy to have so many books in genres no publisher would ever bother with (“football mysteries,” for example), and there are enough of them that many of us are making good livings for the first time in our writing careers. Yeah, not just Amanda Hocking, but authors you never heard of who are making $3K a month profit, or authors like me who still have the day job but are making enough to fund retirement.

And just making enough to be able to write– just to want to write again– that means that we’ll have books that, given the online environment, can be for sale for years and years, and make money for years and years without a lot more work. That frees us up to write more, not to mention gives us something of a business that can help us eventually to retire.

I know I’ve gone on too long and I’m sorry about that. But there’s a reason writers are happy about Amazon. Many of us wouldn’t be writing, much less selling, without Amazon and Smashwords and Apple I-store and their ilk. And many readers wouldn’t have access to the books they enjoy except that this middleman isn’t an all-powerful “Gatekeeper” keeping out the riffraff, but more of an open door.

We like writing again, many of us. Many more of us than would ever have made it through the gatekeeper’s gate, or stayed on the lucrative side of it.

Maybe I won’t make a lot of money on these books (I never made a lot with traditional publishing either). But I know that I’ll reach readers if I keep writing. Before, what I knew is that I could write my heart out for years, and one editorial assistant in some office could decide no reader would ever see this book. Now they can.

Also (I’ll shut up, I promise) we spent the last part of the last century and the first part of this one watching our industry disintegrate, partly because of the shortsightedness and megalomania of the big publishers, who ended up with just a few companies, a few distributors, and a few ideas (Celebrity cookbooks! “Debut” authors!). We watched indy bookstores get pushed out by the former Big Monster Barnes and Noble. We kept hearing that no one was reading anymore. We thought there would be no books in a few years, not because of ebooks, but because the industry was self-destructing.

But… but then along came Amazon, yes, Amazon, which decided that readers hadn’t disappeared at all, but could be reached in huge numbers by using this funny thing called the Internet. Suddenly no one is talking anymore about the death of books. Suddenly no one worries that there will be no more future readers, because heck, all those kids are reading — YA is a huge market now.

Amazon isn’t the only reason we still have a book industry. But it’s a big part of it. And we should all be glad that that happened, because the alternative was an ending.